·Gross
margin improved to 33.0% compared to 17.4%. Excluding $0.7 million in
non-recurring savings, Q2-17 gross margin was approximately 29.2%.

·Operating
expenses were reduced to $11.3 million
compared to $45.6 million ($14.4 million excluding $31.2 million asset
impairment charge).

·Net
loss improved to $7.1 million, or $(0.14) per share, compared to a net loss of
$42.6 million, or $(0.86) per share (net loss of $11.4 million or $(0.23) per
share excluding impairment).

·Adjusted
EBITDA improved to $(2.8) million compared to $(6.3) million.

“Our results for the second quarter continue to be
encouraging in light of the sales pressure we faced as a result of high channel
inventory carried over from the 2016 holiday season,” said Juergen Stark, CEO,
Turtle Beach Corporation. “We believe the fact that we were still able to significantly
grow gross margin and cut the operating loss despite lower revenue leaves us
well positioned for later periods when we expect revenue growth to resume.”

“In preparation for what we expect to be a strong 2017
holiday season, we recently announced a slate of exciting new product launches,”
continued Stark. “This includes our XO Three and Recon 150 headsets, which
refresh a fan-favorite model with proven market leadership to a new price point
of $69.95. Our upcoming Stealth 600 and 700 launches will bring unprecendented
features to the prime $99 and $149 price points, and current sales indicate our
new Recon Chat headsets propelled Turtle Beach to #1 in the chat category across
both console platforms.

“Given these products, estimated channel inventories that
are now lower than last year, as well as a solid lineup of expected new game
launches in the second half of 2017, we are raising our full-year outlook,
which projects significant year-over-year profit growth. We expect our results
will allow us to improve our balance sheet and further our long-term growth
opportunities in areas such as PC gaming, virtual reality and eSports.”

Second Quarter 2017 Financial Results

Net revenuein
the secondquarter was
$19.1 million compared to $29.4 million in the year-ago quarter. The
decline was largely due to lower sales of marquee games during the 2016 holiday
season, leading to higher-than-normal channel inventory and a slower market in
the first half of 2017.

Gross
margininthesecond quarter
improved significantly to 33.0% compared to 17.4% in the year-ago quarter. The
increase was due to costs in the year-ago quarter associated with the launch of
HyperSound Clear™ 500P that did not reoccur,
as well as supply chain and logistics improvements. Gross margin in the second
quarter of 2017 also included approximately $0.7 million in non-recurring
savings related to royalty and tariff refunds. Excluding this benefit, gross
margin was approximately 29.2%.

Gross margin in the headset segment also increased
significantly to 33.3% compared to 24.5% in the year-ago quarter. Excluding the
aforementioned royalty and tariff refunds, headset gross margin was 29.6%. The
increase in headset margin was due in part to lower levels of returns, as well
as supply chain and logistics improvements compared to a year ago.

Operating expenses in the second quarter were reduced to
$11.3 million compared to $45.6 million in the second quarter of 2016, which
included a $31.2 million non-cash goodwill impairment charge associated with HyperSound. Excluding the impairment,
year-over-year operating expenses declined 22% due to a continued focus on cost
management across the business.

Net
loss improved significantly to $7.1 million, or $(0.14) per share, compared to
a net loss of $42.6 million, or $(0.86) per share, in the second quarter of
2016. Excluding the $0.63 per share non-cash goodwill impairment charge, net
loss in the second quarter of 2016 was $11.4 million or $(0.23) per share. The
improvement was primarily driven by lower HyperSound
investments related to the transition to a license model and overall cost
management initiatives.

Adjusted EBITDA (as defined below in “Non-GAAP Financial
Measures”) improved significantly to $(2.8) million compared to $(6.3) million
in the year-ago quarter.

Balance Sheet Highlights

At June 30, 2017, the Company had approximately $1.2 million
of cash, unchanged compared to June 30, 2016. As a result of the Company's $60
million revolving credit facility, Turtle Beach generally does not hold a large
cash balance.

Total outstanding debt principal at June 30, 2017 improved
to $39.7 million compared to $41.5 at June 30, 2016. The debt consisted of $5.2
million of revolving debt, $13.9 million in term loans and $20.6 million in
subordinated debt.

Increased 2017 Outlook

For
the third quarterof2017,Turtle Beachexpectsnet revenueto range between $36-$40million
compared
to$38.4millioninthethird quarterof2016. This includes several million
dollars of revenue pushed from the third quarter into the fourth due to the
expectation that some retailers will load in for the holiday season slightly
later than last year. AdjustedEBITDAisexpectedto be
approximately $1 million compared to$0.5millioninthe third
quarter of 2016.Netlossforthethird quarterisexpectedto
range between $(0.04)-$(0.08) pershare,
compared to a net loss of $(0.91)pershare in the third quarter of 2016, which
included $(0.81) per share in charges related to the HyperSound restructuring. Excluding the charges, net loss was
$(0.10) per share.

For
the full year 2017, Turtle Beach is increasing its financial outlook reported
in May proportional with the second quarter outperformance. Net revenue is now
expected to range between $157-$162 million (from $155-$160 million in the May
outlook) compared to $174 million in 2016. This year-over-year decline reflects
the higher channel inventory impact on first half revenues and an
approximate $6-$7 million year-over-year decline in old-gen headset sales,
bringing this business to a close in 2017. This also assumes no material
revenue from HyperSound.The
Company now expects to generate $11-$13 million in consolidated adjusted EBITDA
in 2017 (from $10-$12 million in the May outlook) compared to $4 million in
2016. This includes an approximately $1 million expected adjusted EBITDA loss
from HyperSound in 2017. Net loss in 2017 is now expected to
range between $(0.06)-$(0.10) per share (from $(0.08)-$(0.12) per share in the
May outlook) based upon 49.3 million diluted shares outstanding. This is compared
to a net loss of $(1.79) per share in 2016
(or a loss of $(0.33) per share in 2016 excluding the goodwill and intangible
asset impairment charges, HyperSound
restructuring reserves and other restructuring charges).

A
table summarizing this outlook has been provided at the end of this release.

With respect to
the Company's adjusted EBITDA outlook for the third quarter and full year 2017,
a reconciliation to its net loss outlook for the same periods has not been
provided because of the variability, complexity, and lack of visibility with
respect to certain reconciling items between adjusted EBITDA and net loss,
including other income (expense), provision for income taxes and stock-based
compensation. These items cannot be reasonably and accurately predicted without
the investment of undue time, cost and other resources and, accordingly, a
reconciliation of the Company’s adjusted EBITDA outlook to its net loss outlook
for such periods is not available without unreasonable effort. These
reconciling items could be material to the Company’s actual results for such
periods.

Please dial-in 5-10 minutes prior to the start time of
the conference call and an operator will register your name and organization.
If you have any difficulty with the conference call, please contact Liolios at
(949) 574-3860.

The
conference call will be broadcast live and available for replay hereand via the investor relations
section of the Company’s website atwww.turtlebeachcorp.com.

A
replay of the conference call will be available after 8:00 p.m. ET on the same
day through August 17, 2017.

Turtle Beach Corporation (http://corp.turtlebeach.com) designs innovative, market-leading audio products.
Under its award-winning Turtle Beach brand (www.turtlebeach.com), the Company is the clear market share leader with its
wide selection of acclaimed gaming headsets for use with Xbox One and
PlayStation®4, as well as personal computers and mobile/tablet devices. Under
the HyperSound brand (www.hypersound.com), the Company develops and licenses pioneering directed
audio solutions with applications in digital signage and kiosks, consumer
electronics and hearing healthcare. The Company's shares are traded on the
NASDAQ Exchange under the symbol: HEAR.

Cautionary
Note on Forward-Looking Statements

This press release
includes forward-looking information and statements within the meaning of the
federal securities laws. Except for historical information contained in this
release, statements in this release may constitute forward-looking statements
regarding assumptions, projections, expectations, targets, intentions or
beliefs about future events. Statements containing the words “may”, “could”,
“would”, “should”, “believe”, “expect”, “anticipate”, “plan”, “estimate”,
“target”, “project”, “intend” and similar expressions constitute
forward-looking statements. Forward-looking statements involve known and
unknown risks and uncertainties, which could cause actual results to differ
materially from those contained in any forward-looking statement.
Forward-looking statements are based on management’s current belief, as well as
assumptions made by, and information currently available to, management.

While the Company
believes that its expectations are based upon reasonable assumptions, there can
be no assurances that its goals and strategy will be realized. Numerous
factors, including risks and uncertainties, may affect actual results and may
cause results to differ materially from those expressed in forward-looking
statements made by the Company or on its behalf. Some of these factors include,
but are not limited to, risks related to the Company’s liquidity, the
substantial uncertainties inherent in the acceptance of existing and future
products, the difficulty of commercializing and protecting new technology, the
impact of competitive products and pricing, general business and economic
conditions, risks associated with the expansion of our business including the
implementation of any businesses we acquire, our indebtedness, the outcome of
our HyperSound strategic review
process and other factors discussed in our public filings, including the risk
factors included inthe Company’s most recent
Annual Report on Form 10-K, Quarterly Report on Form 10-Q and the
Company’s other periodic reports. Except as required by applicable law,
including the securities laws of the United States and the rules and
regulations of the Securities and Exchange Commission, the Company is under no
obligation to publicly update or revise any forward-looking statement after the
date of this release whether as a result of new information, future
developments or otherwise.